About the only predictable thing in the snow removal business is that each impending season will be as unpredictable as the last. After several strong snow seasons in a row, contractors from Colorado to Michigan to Massachusetts were reminded of this cold, hard fact last year.
"Last season's snowfall was off 25% from the year before, and that amount was off 50% from the year before that," tells Tim Emick, president of Timberline Landscaping in Colorado Springs, CO. "Even this past March, which is typically a strong snow month for us, we only got a quarter-inch. Basically, this has been the driest stretch here since the 1880s."
"Last season was much lighter than the previous year (2010-2011)," says Ben Belote, general manager of Battle Creek Landscape Service in Battle Creek, MI. "We were down about half of what we were the previous year."
Don't bet the farm on snow
Fortunately, Battle Creek Landscape Service only plans for a small amount of revenue from snow removal. "The seasons can be so unpredictable that we plan on a small portion—and if we go over that, great," Belote explains.
Up in Massachusetts, contractor Arnie Arsenault is taking a similar approach. Snow removal is an important part of his company's overall business, but not terribly large. "We maintain around 25 accounts," says Arsenault, co-owner of A. Arsenault & Sons in Spencer. "We like it that way because it's easier to manage. Plus, we're big into holiday lighting, which helps us with additional winter-season revenue."
Maryland contractor Dave Lindoerfer has taken an even more conservative approach. "We never budget for snow removal revenue at all; it's just too unpredictable in the D.C. area," says Lindoerfer, owner of Inside Out Services in Sliver Spring.
That approach proved to be a wise one last season. "We only mobilized a couple of times," Lindoerfer relates. "But the thing that hurts is that, with hardly any snow revenue at all last year, we didn't build up the cushion to get us through our spring cleanups (mulch purchases, labor overtime, etc.). We had to tap into our cash reserves and credit line for the first time in a long time."
Lindoerfer's predicament—through no fault of his own, of course—is a good example why many snow removal experts say it's a good idea to have at least a few fixed contracts. That way, some cash flows into your business—even when it doesn't snow. For contractors like Lindoerfer, though, convincing clients to switch to fixed contracts can be a tall order.
"We've never done fixed-price contracts," Lindoerfer points out. "We have always billed by the hour. We're different from contractors in other parts of the country, though. We get such small amounts of snow that we can charge per hour. We've thought about doing some fixed lump-sum bids, especially after last year when we basically got no snow. But it's hard to convince the client."
Back in Michigan, Belote feels the same way. "We aren't looking to do anything significantly different in the way of contracts or pricing," he says. "We've tried to push seasonal (fixed) contracts, but customers are not interested as a whole. They prefer to pay per snow event."
Joel Beaver, owner of 4T Total Lawn in Lenexa, KS, also tends to prefer per-event (aka per-push) contracts. "We've tried bidding on fixed contracts in the past," Beaver says. "We've never gotten one. Quite frankly, I'm glad we haven't. It seems to me that there's a good chance somebody could get hurt; either us or the client. We'd rather charge for the work that we do, breaking it down by inches. To me that seems to be the fairest way, and it's the way we will continue."
Arsenault tries to keep a balance of fixed-cost and per-push contracts, along with a handful that are based on an hourly rate. "It's usually the client that is driving which kind of contract we use, and then it's up to me to accept the terms," Arsenault says.